Blockbuster files for Chapter 11, will slash debt

SimonKennedy

LONDON (MarketWatch) -- Blockbuster Inc.
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said Thursday that it has filed voluntary Chapter 11 petitions after agreeing a deal with bondholders to recapitalize the company. Blockbuster said the filing in the U.S. Bankruptcy Court of the Southern District of New York applies to the company and its domestic subsidiaries, but not to non-U.S. operations or the group's franchisees. The group said it has agreed a deal with bondholders to swap secured notes for equity of a reorganized Blockbuster. The agreement will reduce its indebtedness to around $100 million from the current level of nearly $1 billion. Under the plan, holders of subordinated debt, preferred stock and common stock would not receive anything. Blockbuster said all 3,000 stores in the U.S. remain open, but that it will "evaluate its U.S. store portfolio" in a bid to enhance profitability.

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